JJB Sports like-for-likes plummeted 23.3 per cent in the 16 weeks to May 17 as it revealed its supply suffered as a result of a lack of credit insurance.
Total sales slumped 42.1 per cent. The like-for-like fall includes a 25.8 per cent decrease in its stores and a 7.1 per cent increase in its fitness clubs, which were sold on March 25.
In the 52 weeks to January 25, JJB made a pre-tax loss of £189.2m against a £10.8m profit last year. In this period, like-for-likes dropped 6.9 per cent.
The retailer attributed the decline in sales to low stock levels, the “negative publicity which has surrounded the company”, and the current retail environment.
JJB said: “As a result of our financial difficulties over the last nine months the Company has had to exist with stock levels significantly below the previous year. Many suppliers have been reluctant to supply stock because of the lack of trade credit insurance and the widely held belief that the Company was likely to go into administration.
“We do not anticipate any significant improvement in sales until the 4th quarter of 2009.”
In the 16 weeks to May 17, gross margin dropped by 580 basis points, and the stock holding in the retail business fell 46.9 per cent.
JJB said it expects its Company Voluntary Arrangement proposal to be implemented on or around May 28.
It said it is “currently unable to conclude on going concern” and accordingly had to publish unaudited accounts. It expects to publish its audited annual financial statements in the first half of June 2009.
Executive chairman Sir David Jones said: “When I am satisfied we are firmly on the road to recovery and after we have appointed a new chief executive, I intend to become the part time Chairman.”
He said the 12 month period has been an “exceedingly difficult one” for JJB. He said former chief executive Chris Ronnie wrongly pursued a strategy to try to take market share from JD Sports Fashion and Sports Direct, while trying to “emulate the trading philosophy” of Sports Direct.
But he added: “With our restructuring progressing very well, we now have the opportunity to revitalise JJB Sports as a focused multi-channel retail business.”
Jones said the financial restructuring has been a “nerve-racking experience”.